Tail-end spend management review

CASE STUDY

September 2021

Key Results

up to 80% of spend consolidation identified

32% cost reduction on sample products

Reduced transactional costs

Improved standardisation of products.

A drilling company requested a consultancy review to better manage their tail-end spend

Overview

We were invited by a global drilling company to review their existing spending and propose a solution to improve their tail-end spend management. We were asked to achieve the following objectives:

Reduce the number of POs placed and increase the volume of automated POs
Improve product standardisation
Deliver product and transactional cost savings
Improve spend visibility and reduce the volume of vendors on AVL (Approved Vendor List)

Approach

Our team initially reviewed UK data only to enable a quick turnaround in line with the set-out objectives and to prove the opportunity and concept could be delivered.

We analysed spend data from 535 suppliers and made recommendations for consolidation of spend to reduce the number of active vendors. We also identified categories of spend which could be automated through our eProcurement portal and proposed data cleansing and to standardise the purchased products.

We also priced a sample of products to offer savings to the customer within those categories of spend and offered a long-term continuous improvement plan consisting of periodic data analytics reviews including spend and KPI reporting, where 80:20 would continue to streamline and add value to the supply chain.

Deliverables

Our analysis identified an opportunity to reduce tail-end suppliers by as much as 80% by consolidating spend through 80:20. We were also able to offer 32% cost reductions on the sample of products based on an annual spend of £500,000.

Our ability to upload and manage supplier catalogues on our eProcurement Portal also delivered a significant reduction in transactional costs and improved standardisation of products.

Even where the client would want to retain a direct relationship with a particular supplier due to risk and or value, we could still host that supplier’s catalogue on our ePro portal to deliver transactional savings.